The History of England, from the Accession of James the Second - Volume 4, Thomas Babington Macaulay [early readers .txt] 📗

for a hundred thousand pounds. On this subject Chamberlayne was proof to ridicule, to argument, even to arithmetical demonstration. He was reminded that the fee simple of land would not sell for more than twenty years' purchase. To say, therefore, that a term of a hundred years was worth five times as much as a term of twenty years, was to say that a term of a hundred years was worth five times the fee simple; in other words, that a hundred was five times infinity. Those who reasoned thus were refuted by being told that they were usurers; and it should seem that a large number of country gentlemen thought the refutation complete.519

In December 1693 Chamberlayne laid his plan, in all its naked absurdity, before the Commons, and petitioned to be heard. He confidently undertook to raise eight thousand pounds on every freehold estate of a hundred and fifty pounds a year which should be brought, as he expressed it, into his Land Bank, and this without dispossessing the freeholder.520 All the squires in the House must have known that the fee simple of such an estate would hardly fetch three thousand pounds in the market. That less than the fee simple of such an estate could, by any device, be made to produce eight thousand pounds, would, it might have been thought, have seemed incredible to the most illiterate foxhunter that could be found on the benches. Distress, however, and animosity had made the landed gentlemen credulous. They insisted on referring Chamberlayne's plan to a committee; and the committee reported that the plan was practicable, and would tend to the benefit of the nation.521 But by this time the united force of demonstration and derision had begun to produce an effect even on the most ignorant rustics in the House. The report lay unnoticed on the table; and the country was saved from a calamity compared with which the defeat of Landen and the loss of the Smyrna fleet would have been blessings.

All the projectors of this busy time, however, were not so absurd as Chamberlayne. One among them, William Paterson, was an ingenious, though not always a judicious, speculator. Of his early life little is known except that he was a native of Scotland, and that he had been in the West Indies. In what character he had visited the West Indies was a matter about which his contemporaries differed. His friends said that he had been a missionary; his enemies that he had been a buccaneer. He seems to have been gifted by nature with fertile invention, an ardent temperament and great powers of persuasion, and to have acquired somewhere in the course of his vagrant life a perfect knowledge of accounts.

This man submitted to the government, in 1691, a plan of a national bank; and his plan was favourably received both by statesmen and by merchants. But years passed away; and nothing was done, till, in the spring of 1694, it became absolutely necessary to find some new mode of defraying the charges of the war. Then at length the scheme devised by the poor and obscure Scottish adventurer was taken up in earnest by Montague. With Montague was closely allied Michael Godfrey, the brother of that Sir Edmondsbury Godfrey whose sad and mysterious death had, fifteen years before, produced a terrible outbreak of popular feeling. Michael was one of the ablest, most upright and most opulent of the merchant princes of London. He was, as might have been expected from his near connection with the martyr of the Protestant faith, a zealous Whig. Some of his writings are still extant, and prove him to have had a strong and clear mind.

By these two distinguished men Paterson's scheme was fathered. Montague undertook to manage the House of Commons, Godfrey to manage the City. An approving vote was obtained from the Committee of Ways and Means; and a bill, the title of which gave occasion to many sarcasms, was laid on the table. It was indeed not easy to guess that a bill, which purported only to impose a new duty on tonnage for the benefit of such persons as should advance money towards carrying on the war, was really a bill creating the greatest commercial institution that the world had ever seen.

The plan was that twelve hundred thousand pounds should be borrowed by the government on what was then considered as the moderate interest of eight per cent. In order to induce capitalists to advance the money promptly on terms so favourable to the public, the subscribers were to be incorporated by the name of the Governor and Company of the Bank of England. The corporation was to have no exclusive privilege, and was to be restricted from trading in any thing but bills of exchange, bullion and forfeited pledges.

As soon as the plan became generally known, a paper war broke out as furious as that between the swearers and the nonswearers, or as that between the Old East India Company and the New East India Company. The projectors who had failed to gain the ear of the government fell like madmen on their more fortunate brother. All the goldsmiths and pawnbrokers set up a howl of rage. Some discontented Tories predicted ruin to the monarchy. It was remarkable, they said, that Banks and Kings had never existed together. Banks were republican institutions. There were flourishing banks at Venice, at Genoa, at Amsterdam and at Hamburg. But who had ever heard of a Bank of France or a Bank of Spain?522 Some discontented Whigs, on the other hand, predicted ruin to our liberties. Here, they said, is an instrument of tyranny more formidable than the High Commission, than the Star Chamber, than even the fifty thousand soldiers of Oliver. The whole wealth of the nation will be in the hands of the Tonnage Bank,-such was the nickname then in use;-and the Tonnage Bank will be in the hands of the Sovereign. The power of the purse, the one great security for all the rights of Englishmen, will be transferred from the House of Commons to the Governor and Directors of the new Company. This last consideration was really of some weight, and was allowed to be so by the authors of the bill. A clause was therefore most properly inserted which inhibited the Bank from advancing money to the Crown without authority from Parliament. Every infraction of this salutary rule was to be punished by forfeiture of three times the sum advanced; and it was provided that the King should not have power to remit any part of the penalty.

The plan, thus amended, received the sanction of the Commons more easily than might have been expected from the violence of the adverse clamour. In truth, the Parliament was under duress. Money must be had, and could in no other way be had so easily. What took place when the House had resolved itself into a committee cannot be discovered; but, while the Speaker was in the chair, no division took place. The bill, however, was not safe when it had reached the Upper House. Some Lords suspected that the plan of a national bank had been devised for the purpose of exalting the moneyed interest at the expense of the landed interest. Others thought that this plan, whether good or bad, ought not to have been submitted to them in such a form. Whether it would be safe to call into existence a body which might one day rule the whole commercial world, and how such a body should be constituted, were questions which ought not to be decided by one branch of the Legislature. The Peers ought to be at perfect liberty to examine all the details of the proposed scheme, to suggest amendments, to ask for conferences. It was therefore most unfair that the law establishing the Bank should be sent up as part of a law granting supplies to the Crown. The Jacobites entertained some hope that the session would end with a quarrel between the Houses, that the Tonnage Bill would be lost, and that William would enter on the campaign without money. It was already May, according to the New Style. The London season was over; and many noble families had left Covent Garden and Soho Square for their woods and hayfields. But summonses were sent out. There was a violent rush back to town. The benches which had lately been deserted were crowded. The sittings began at an hour unusually early, and were prolonged to an hour unusually late. On the day on which the bill was committed the contest lasted without intermission from nine in the morning till six in the evening. Godolphin was in the chair. Nottingham and Rochester proposed to strike out all the clauses which related to the Bank. Something was said about the danger of setting up a gigantic corporation which might soon give law to the King and the three Estates of the Realm. But the Peers seemed to be most moved by the appeal which was made to them as landlords. The whole scheme, it was asserted, was intended to enrich usurers at the expense of the nobility and gentry. Persons who had laid by money would rather put it into the Bank than lend it on mortgage at moderate interest. Caermarthen said little or nothing in defence of what was, in truth, the work of his rivals and enemies. He owned that there were grave objections to the mode in which the Commons had provided for the public service of the year. But would their Lordships amend a money bill? Would they engage in a contest of which the end must be that they must either yield, or incur the grave responsibility of leaving the Channel without a fleet during the summer? This argument prevailed; and, on a division, the amendment was rejected by forty-three votes to thirty-one. A few hours later the bill received the royal assent, and the Parliament was prorogued.523 In the City the success of Montague's plan was complete. It was then at least as difficult to raise a million at eight per cent. as it would now be to raise thirty millions at four per cent. It had been supposed that contributions would drop in very slowly; and a considerable time had therefore been allowed by the Act. This indulgence was not needed. So popular was the new investment that on the day on which the books were opened three hundred thousand pounds were subscribed; three hundred thousand more were subscribed during the next forty-eight hours; and, in ten days, to the delight of all the friends of the government, it was announced that the list was full. The whole sum which the Corporation was bound to lend to the State was paid into the Exchequer before the first instalment was due.524 Somers gladly put the Great Seal to a charter framed in conformity with the terms prescribed by Parliament; and the Bank of England commenced its operations in the house of the Company of Grocers. There, during many years, directors, secretaries and clerks might be seen labouring in different parts of one spacious hall. The persons employed by the bank were originally only fifty-four. They are now nine hundred. The sum paid yearly in salaries amounted at first to only four thousand three hundred and fifty pounds. It now exceeds two hundred and ten thousand pounds. We may therefore fairly infer that the incomes of commercial clerks are, on an average, about three times as large in the reign of Victoria as they were in the reign of William the Third.525

It soon appeared that Montague had, by skilfully availing himself of the financial difficulties of the country, rendered an inestimable service to his party. During several generations the Bank of England was emphatically a Whig body. It was Whig,